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2016 (5) TMI 705 - AT - Income TaxGrant of higher rate of depreciation @80% on Civil work and portion of installation and commissioning work included in the block of assets of windmill - Held that:- Civil work comprising of foundation of the windmill is an integral part of windmill erection. Therefore, the same is eligible for depreciation at the same rate as is applicable in the case of windmill. Similarly, the cost of commissioning and erecting windmill cannot be said to be separate from the windmill as it is directly related to the functioning of the windmill. Therefore, the same rate of depreciation will apply on the cost of commissioning of the windmill. Deduction in respect of cost of civil work which was required for foundation of windmill @ 80% i.e. expenditure incurred on erection and commissioning, including foundation work. The assessee had incurred cost for electrical work including supply and installation of electrical items, labour charges for testing and commissioning out and contribution towards power evacuation infrastructure cost, which were incurred exclusively for running and maintenance of windmill installed and proper functioning of windmill. No infirmity in the order of CIT(A) in allowing the claim of higher depreciation to the assessee - Decided in favour of assessee. Revenue v/s capital expenditure - expenditure on account of mobiles written off - Held that:- We find that the Tribunal in Inductotherm (India) Ltd. Vs. DCIT (1999 (6) TMI 45 - ITAT AHMEDABAD-C) had held that unless and until scrap value of the machinery which has been discarded, demolished or destroyed during the previous year is ascertained the same cannot be reduced for the purpose of computing depreciation. In the instant case, the machinery in question was only scraped during the year, that meant it had not been used during the previous year. The scrap value of the same had not been ascertained as yet which would be possible only after selling the same. Therefore, nothing could be reduced at present from the written down value of the block assets and the Tribunal thus, directed the Assessing Officer to allow depreciation as claimed by the assessee on the aforesaid assets. The issue arising before us is similar to the issue before the Ahmedabad Bench of Tribunal in Inductotherm (India) Ltd. Vs. DCIT (supra) and following the same parity of reasoning, we hold that the assessee is entitled to the claim of depreciation on the assets - Decided in favour of assessee. Disallowance on account of interest expenditure - Held that:- Though the assessee had during the course of assessment proceedings agreed to the aforesaid addition, but in view of the facts being brought to the notice of CIT(A) and also before us, we find merit in the claim of assessee. Following the same line of reasoning as in assessment year 2008-09, we direct the Assessing Officer to re-compute the interest expenditure in relation to the projects undertaken by the assessee and such interest which is relatable to project, revenue of which has been recognized by the assessee in the year under appeal, then the same is to be allowed as deduction. However, the balance interest expenditure is to be allocated to the projects under construction and the interest has to be capitalized.
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